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Haymarket, VA, March 25, 2016 – Fred Campbell, director of Tech Knowledge, issued the following statement regarding Netflix’s admission that its been secretly throttling its wireless video traffic on a discriminatory basis:

“When I first raised concerns about Netflix’s cynical manipulation of Internet traffic flows in this analysis, I thought the FCC would ask Netflix some questions like these. Instead, it was a Canadian regulator who used language from my initial analysis (in this hearing) to ask Netflix whether it was throttling traffic to aid its net neutrality lobbying efforts, and Netflix’s director of global public policy who said, ‘The allegations that we slowed our traffic or otherwise [are] responsible for degrading users’ service are categorically untrue.’

Yesterday, however, staff at the Wall Street Journal reported that Netflix now admits that it has been secretly throttling its video traffic for more than five years in a manner that is patently discriminatory.

Make no mistake, the importance of this revelation for U.S. Internet policy goes well beyond Netflix and the all-too-common practice of corporate hypocrisy in Washington. Policymakers in the U.S. have systematically excluded Netflix and all other “over-the-top” companies from Internet, privacy, and video regulations that would otherwise apply based on the presumption that over-the-top companies lack the incentive or ability to engage in discriminatory or anticompetitive behavior that could harm consumers or competition. Netflix just proved that presumption is dead wrong.

The public policies that govern communications systems should be purposeful, not haphazard. They should be applied in a way that’s even-handed, not in a way that treats one set of industry participants better than another. They should be based on credible, reliable data, not anecdotal evidence offered by large corporations seeking government favors. And when there are credible allegations that a company has secretly engaged in practices that have been deemed harmful to consumers and competition, policymakers should investigate those allegations in good faith, not ignore them.

Now that Netflix has finally admitted the truth, Congress, the FCC, and the FTC should fully investigate Netflix’s secret and discriminatory throttling practices.”

Tech Knowledge promotes market-oriented technology policies on behalf of the public interest. Additional information about Tech Knowledge can be found on our website, techknowledge.center.

“Today, we celebrate the first glorious anniversary of the Information Purification Directives. We have created, for the first time in all history, a garden of pure ideology—where each worker may bloom, secure from the pests purveying contradictory truths. Our Unification of Thoughts is more powerful a weapon than any fleet or army on earth. We are one people, with one will, one resolve, one cause. Our enemies shall talk themselves to death, and we will bury them with their own confusion. We shall prevail!”Apple advertisement, 1984.

The pests of reality’s contradictory truths threw the first hammer at the ideological Internet on Monday, when the Wall Street Journal reported that HBO, Showtime, and Sony Corp. want to stream their Web-TV content separately from the “public Internet.” They fear Internet congestion will only get worse as viewers stream more video content and they don’t want to offer consumers a frustrating experience. So they are talking with major broadband providers about having their streaming services treated as managed services that would give consumers the best experience possible. Read More

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Last September, the National Journal named Netflix the new face of net neutrality. According to one FCC official, Netflix advocates were “screaming their heads off” last last year demanding that the agency reclassify broadband Internet access as a public utility service under “Title II” of the Communications Act.

We should all be outraged to discover that a major shift in our nation’s communications policy was driven by duplicitous corporate maneuvering. But it would be a mistake to blame Netflix for the folly of our policymakers. Corporate posturing and specious arguments designed to gain a corporate advantage are nothing new in Washington, and independent, expert agencies are ordinarily expected to see through it. The fault lies with a White House that was too eager to embrace Netflix’s sound bites for political reasons, and an FCC that was too easily bent to the White House’s will. Read More

The Federal Communications Commission’s (FCC) proposal to regulate over-the-top (OTT) video providers as ‘multichannel video programming distributors’ (MVPDs) — regulatory speak for pay-TV networks like cable and satellite television — is a harbinger of the regulatory reality facing so-called ‘edge’ companies. For over a decade, they have been pushing the FCC to impose strict ‘net neutrality’ requirements on Internet service providers (ISPs) (like Verizon FIOS) that would leave Silicon Valley giants (like Google and Netflix) unbounded by the agency’s authority. The FCC’s move to regulate OTT companies who offer ‘linear’ video programming should have these tech titans asking themselves, “Who’s next?” Read More

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The following op-ed authored by Fred Campbell was originally published in the Detroit News.

Did Netflix, the self-anointed champion of Net neutrality and higher broadband speeds, deliberately cause an Internet slowdown for its own subscribers?

New research from computer scientists at the Massachusetts Institute of Technology and the Center for Applied Internet Data Analysis shows that, as its traffic increased in the last two years, Netflix forced it through clogged delivery routes, when less congested channels were available.

The scientists concluded the data “strongly suggest that the correct response to growing congestion” was for Netflix to use different connections for its traffic, not for Comcast to add capacity. This corroborates Comcast’s argument that “Netflix has not been honest.”

Evidence also suggests that, at the same time Netflix allowed congestion to increase until it affected performance, Netflix published misleading data casting the blame on Comcast. Read More

I recently explained how Netflix held its subscribers hostage to reduced service quality while blaming Comcast. During a hearing at the Canadian Radio-Television and Telecommunications Commission (CRTC), Netflix “categorically” denied any responsibility for slowing its traffic or otherwise degrading the quality of its service.

Given that Netflix is confident that it bears no responsibility for the slow delivery of its Internet traffic to Comcast subscribers, Netflix should have no problem providing public answers to a few pertinent questions.Read More

A stunning revelation is buried in a lengthy Netflix filing at the Federal Communications Commission (FCC): Netflix used its subscribers as pawns in a Machiavellian game of regulatory chess designed to win favorable Internet regulations.

The filing reveals that Netflix knowingly slowed down its video streaming service with the intention of blaming Internet service providers (ISPs). Specifically, Netflix used its relationships with Internet ‘backbone’ providers (e.g., Level 3, Cogent) to deliberately congest their peering links with ISPs, and at the same time, started publishing ‘ISP speed rankings’ to make it appear that ISPs were causing the congestion. It appears that Netflix cynically held its subscribers hostage to reduced service quality in order to pressure the FCC into adopting favorable Internet regulations that would permanently lower Netflix’s costs of doing business.

Netflix’s plan to frame ISPs for sabotaging its service has been surprisingly successful so far. Some subscribers have blamed their ISPs for the service disruptions Netflix itself caused, which prompted the FCC to open an investigation of the Internet backbone market. Now all Netflix needs is for the FCC to adopt new regulations.

This post attempts to shed some light on Netflix’s hostage strategy before it’s too late. After a brief summary of the Internet backbone market, it describes the origins of the strategy and explains how Netflix succeeded in manipulating public opinion. Read More

This is the second post in a series addressing fundamental questions presented by the prospect of applying per senet neutrality rules under Title II. The first post is available HERE.

The first post in this series concluded that the logic of the gatekeeper theory the FCC used to justify the imposition of per senet neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. This post presents a brief analysis of some intermediary services to which the gatekeeper theory would apply if the FCC relies on it to impose per senet neutrality rules under Title II.

The analysis demonstrates that Internet companies must also ‘ask permission’ to pass gates erected by Google, Apple, and Netflix (non-ISP gatekeepers) in order to obtain access to end users:

These non-ISP gatekeepers routinely use their gatekeeper control to block, degrade, or discriminate against upstream edge providers (far edge providers);

End users may incur significant costs in switching from one non-ISP gatekeeper to another; and

These non-ISP gatekeepers provide services in market segments that are highly concentrated.

It would thus be arbitrary and capricious for the FCC to impose per senet neutrality obligations only on ISPs under Title II.

To be clear, I’m not suggesting that reclassification of broadband Internet access services as ‘telecommunications services’ under Title II is necessary or that the FCC should otherwise regulate non-ISP gatekeepers. The analysis in the post is intended to illustrate that the FCC’s theory of gatekeeper control is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. Read More

A subsequent review of relevant precedent revealed another powerful reason for the FCC to reject the interconnection rights sought by Netflix: Even if the FCC were to reclassify broadband Internet access as a Title II service while leaving Netflix unregulated, the FCC would lack legal authority to require Internet service providers to interconnect with Netflix at no charge. Read More

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Though this disclaimer was likely motivated partly by the recent kerfuffle over the Chairman’s initial net neutrality proposal, he has another reason “to be clear” that the agency is only “collecting information, not regulating”: Netflix has already admitted publicly that “interconnection” fees are “so small” that they don’t affect consumers. Read More